Mercury Insurance Company Misleads Its Policyholders in Prop. 17 Letter Obtained by Consumer Watchdog

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3rd Largest Auto Insurer Doesn’t Plan On Telling Customers
They Could Face Price Hikes

Santa Monica, CA –A letter Mercury Insurance Company
apparently intends to send to its policyholders this week urging them
to support Proposition 17 fails to disclose that its customers could be
forced to pay enormous surcharges if the initiative passes. It also
contains other false and misleading statements, consumer advocates said

Mercury’s letter, a copy of which was obtained by Consumer Watchdog,
comes just a day after the company began a long-expected onslaught of TV
ads that immediately drew criticism from experts and consumer advocates
for misleading voters. The letter can be downloaded at

“This is yet another reason why Californians cannot trust Mercury
Insurance or Proposition 17,” said insurance reformer Harvey Rosenfield.
“To protect yourself and your family from the impact of this deceitful
and dangerous initiative, you must vote no on 17.”

Mercury has consistently misled the public concerning Proposition 17.
The company has denied that Proposition 17 will allow it and other
insurance companies to raise rates and sued both the Attorney General
and consumer advocates to try to prevent that information from appearing
in the voter guide. Mercury lost that battle, and the AG’s analysis
states that Prop 17 “will allow insurance companies to increase cost of
insurance to drivers who do not have a history of continuous insurance

The Mercury letter obtained by Consumer Watchdog makes the following
false and misleading statements:

Mercury Statement: “From 1995-2005, a continuous
coverage discount was available to all California drivers who maintained
continuous insurance coverage with any insurer. During this time
Mercury provided up to a 25% discount to all customers who maintained
continuous insurance coverage.”
Fact: Setting premiums based on whether a motorist has
been previously insured has been illegal since voters passed a ban on the practice in
1988. However, beginning in the 1990s, Mercury intentionally violated
that law, surcharging people 40% or more, until it was forced to stop by
the courts and the insurance commissioner. Prop 17 would legalize these

Mercury Statement:
“Proposition 17 ends the penalty for
changing insurers.”
Fact: There is no penalty for changing insurers.

Mercury Statement:
Current law “punishes responsible drivers by
prohibiting them was taking their continuous coverage discount with
them if they switch insurance companies…They should be able to take
their continuous coverage discount” when they “change insurers.”
Fact: There is a discount for customers who remain with
the same company for a period of years, but Prop 17 does not address
that discount. Moreover, contrary to Mercury’s statement, if 17 passes,
and you switch companies, the new company will not honor your loyalty
discount with your previous company.

Mercury Statement:
“This is no different than…the law allowing
cell phone customers to keep their phone numbers when changing telephone
Fact: Cell phone companies cannot penalize you if you
never owned a cell phone before, or stopped using one. Prop 17 allows
insurance companies to penalize you if you never owned a car before, or
never drove – even if you are a good driver.

Mercury Statement:
“Proposition 17 encourages drivers to stay
insured – meaning fewer uninsured motorists.”
Fact: Prop 17 will legalize surcharges that will lead
to more uninsured motorists on the road, according to the California
Department of Insurance.

Mercury Statement:
Prop 17 “protects our military…if they
cancel insurance while overseas.”
Fact: Mercury fails to reveal that under Proposition
17, military serving stateside
get surcharged if their coverage lapses for more than ninety days.

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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